India Power Corporation Limited ... vs The State Of West Bengal And Others
2023 Latest Caselaw 4960 Cal

                     In the High Court at Calcutta
                    Constitutional Writ Jurisdiction
                             Appellate Side

The Hon'ble Justice Sabyasachi Bhattacharyya

                          WPA No. 17132 of 2023

                 India Power corporation Limited (IPCL)
                                  Vs.
                  The State of West Bengal and others

     For the petitioner             :    Mr. Saktinath Nath Mukherjee,
                                         Mr. Surojit Nath Mitra,
                                         Mr. S. Dutta,
                                         Mr. Anindya Halder

     For the
     Respondent nos.1, 5 &6         :    Mr. Somnath Ganguli,

Ms. Priyamvada Singh

For the Respondent nos.3 & 4 : Mr. Manoj Munshi, Ms. Usha Doshi, Ms. Priyanka Gope

For the respondent no.7 : Mr. Triptimoy Talukder, Mr. Shamba Chakraborty, Mrs. Chanchala Chatterjee

Hearing concluded on : 04.08.2023

Judgment on : 11.08.2023

Sabyasachi Bhattacharyya, J:-

1. The present challenge has been preferred against a cancellation of a

Letter of Award (LoA) and debarment of the petitioner-company. The

petitioner participated in a tender floated by the respondent no. 3 and

turned out the successful bidder. LoA was, accordingly, issued to the

petitioner on March 31, 2023. As per the terms of the tender

document, the successful bidder was to sign the AMISP Contract and

furnish the initial Performance Security within 14 days from the date

of issuance of the LoA. Failure to do so shall constitute "sufficient

grounds for the annulment of the award and forfeiture of the Bid

Security". In that event, the Utility may award the AMISP Contract to

the next lowest Bidder.

2. The petitioner allegedly engaged the respondent no. 7, a financial

service provider, to procure and to issue the performance bank

guarantee to the tendering authority on behalf of the petitioner.

However, on three successive occasions, the respondent no. 7 issued

fake bank guarantees, upon coming to know of which the petitioner

immediately lodged complaint with the police, giving rise to an F.I.R.

The petitioner ultimately furnished a proper and valid bank guarantee

on May 17, 2023. However, the same was not accepted and the LoA

was cancelled, and the petitioner debarred for three years from

participating in the tenders of the respondent no. 3. The writ petition

has been filed against such cancellation and debarment.

3. Learned Senior Advocate appearing for the petitioner submits that the

petitioner was not at fault for the issuance of fake bank guarantees.

The petitioner entrusted the respondent no. 7 with the task of

procuring and furnishing the same, as evident from an agreement

annexed to the writ petition. The petitioner also spent substantial

amounts on such contract.

4. Immediately upon learning of the forgery, the petitioner lodged

complaint with the police and also communicated with the respondent

authorities expressing its helplessness. Thus, the petitioner could not

be faulted.

5. It is submitted that the petitioner-company has been doing business

for over a century and have a formidable goodwill. It would not stoop

to so low levels as alleged, that too, after becoming successful in the

tender.

6. Learned Senior Advocate appearing for the petitioner next argues that

the respondent no. 3 had condoned the delay in issuing the

performance bank guarantee by accepting the late filing of the same

on May 17, 2023 as well as all prior bank guarantees. Before that, the

petitioner had put in the first bank guarantee in due time; however,

the same turned out to be fake, for which the petitioner was not

responsible in any manner.

7. It is next argued that, as per the conditions in the tender document,

delay in furnishing the bank guarantee would only furnish "sufficient

ground" for annulling the LoA, and not have the effect of automatically

annulling the LoA. Thus, there was sufficient discretion available to

the tendering authority to condone the same. The respondent nos. 3

and 4 accepted the bank guarantee much after the expiry of the

stipulated time and never tendered back the same. Thus, by its

conduct, the tender-issuing authority has accepted the delayed

submission of bank guarantee and condoned the delay in filing the

same.

8. Learned Senior Advocate, lastly, contends that the technical default

on the part of the petitioner, due to no fault of its own, does not justify

the cancellation of the LoA and debarment of the petitioner.

9. Before entering into the merits of the case, learned counsel appearing

for the respondent nos. 3 and 4 raises an objection as to

maintainability of the writ petitioner before the Calcutta High Court

on the ground of territorial jurisdiction.

10. It is argued that all the relevant transactions were performed in

Madhya Pradesh. Even the website portal of the respondent no.3 is

run and operated in Madhya Pradesh by the Government of Madhya

Pradesh. The bids in the tender process-in-question were all

evaluated in Madhya Pradesh. Even the decision to cancel the

petitioner‟s LoA was taken in Madhya Pradesh.

11. Thus, this Court does not have territorial jurisdiction to hear the

matter.

12. Learned counsel places reliance on Union of India and others Vs. Adani

Export Limited and another, reported at (2002) 1 SCC 567, where the

Supreme Court, while considering the scope of Article 226(2) of the

Constitution of India, observed that none of the facts therein were in

any way connected with the reliefs sought so as to constitute the

cause of action at Ahmedabad. Two of such facts were that the

respondents carried on their business from Ahmedabad and the

respondents had executed a bank guarantee through their bankers at

Ahmedabad as well as a bond at Ahmedabad. Similar to the present

case, it is argued, in the said case also the respondents had pleaded

jurisdiction of the Gujarat High Court in view of such facts having

occurred in Ahmedabad, which was turned down.

13. Learned counsel next cites Oil and Natural Gas Commission Vs. Utpal

Kumar Basu and others, reported at (1994) 4 SCC 711. In the said

case, a part of the cause of action was argued to arise within the

jurisdiction of the Calcutta High Court because the concerned party

became aware of the advertisement in Calcutta, submitted its bid from

Calcutta and made representations, demanding justice, from Calcutta

or learning about the rejection of the offer. However, it was held that

the Calcutta High Court did not have jurisdiction. The object

underlying the provision in Section 21 of the Code of Civil Procedure,

it was held, was not to encourage such litigants who deliberately

invoke the jurisdiction of a court having no jurisdiction for ulterior

motives, but to avoid harassment to litigants who had bona fide

commenced proceedings in a court which is later found to be wanting

in jurisdiction.

14. Learned counsel further cites South East Asia Shipping Co. Ltd. Vs.

Nav Bharat Enterprises Pvt. Ltd. and others, reported at (1996) 3 SCC

443, where the Supreme Court held, inter alia, that cause of action

consists of the bundle of facts which give cause to enforce the legal

injury for redress in a court of law and means every fact which, if

traversed, it would be necessary for the plaintiff to prove in order to

support his right to a judgment of the court. In other words, it is a

bundle of facts which, taken with the law applicable to them, gives the

plaintiff a right to claim relief against the defendant and must include

some act done by the defendant.

15. Learned counsel further cites a Division Bench judgment of this Court

in Utkarsh India Limited and Another Vs. Central Coalfields Limited

and Another, reported at 2021 SCC OnLine Cal 4259 where, in case of

an online transaction, the Court held that though appellants have

their place of business within the jurisdiction of this Court and had

received the notice of disqualification at their office at Kolkata, the

Jharkhand High Court had territorial jurisdiction since the integral

part of cause of action, that is, floating of tender, scrutiny of

documents and decision to disqualify the appellants and to impose

penalty was taken at Ranchi, Jharkhand.

16. Learned counsel for the respondent nos.3 and 4 then cites Aligarh

Muslim University and another Vs. Vinay Engineering Enterprises (P)

Ltd. And another, reported at (1994) 4 SCC 710, where the Supreme

Court had deprecated the assumption of jurisdiction by the High

Court by adopting a queer line of reasoning, although no cause of

action had arisen within its territorial jurisdiction.

17. The contesting respondents also place reliance on National Textile

Corpn. Ltd. And others Vs. Haribox Swalram and others, reported at

(2004) 9 SCC 786. The Supreme Court, while considering Article

226(2), turned down the claim that the Calcutta High Court had

jurisdiction because letters were sent by the writ petitioners from

Calcutta and replies had also been received at Calcutta and that the

petitioners were carrying on business at Calcutta, similar to the

present case.

18. The contesting respondents next rely on Alchemist Ltd. And another

vs. State Bank of Sikkim and others, reported at (2007) 11 SCC 335.

In the said case as well, the offer of the appellant-Company was

accepted and acceptance was communicated at Chandigarh. The

letter of revocation was received by the appellant-company at

Chandigarh. Consequences of the revocation ensued at Chandigarh.

However, on considering all the relevant judgments on the issue, it

was held that for the purpose of deciding whether the facts averred by

the appellant-petitioner would or would not constitute a part of the

cause of action, one has to consider whether such fact constitutes a

material, essential or integral part of the cause of action.

19. Thus, it is submitted that since the relevant decisions in the present

case were taken in Madhya Pradesh, including the cancellation of the

LoA and debarment of the petitioner, this Court does not have

territorial jurisdiction to entertain and decide the writ petition.

20. On merits, learned counsel for the respondent nos. 3 and 4, who are

the contesting respondents, submits that the furnishing of three fake

bank guarantees in quick succession was sufficient to debar the

petitioner from participating in future contracts with the respondent

no. 3 for three years. It is argued that the petitioner deliberately took a

chance by furnishing fake guarantees, hoping that the forgery would

be discovered only after the contract was awarded and at the stage of

invoking the same much later, when it would be too late.

21. It is argued that, in normal course of business, it is the bidder itself

which is to furnish a bank guarantee. It is unheard of that a third

party-financial service provider would furnish the bank guarantee on

behalf of the bidder. Even as per the contract, it is the successful

bidder who must furnish the same.

22. It is alleged by the contesting respondents that the petitioner

perpetrated the fraud and/or colluded in furnishing fake bank

guarantees. Thus, the respondent no. 3 was justified in its

apprehension of dubious credentials of the petitioner and rightly

annulled the LoA and debarred the petitioner from participating in

future tenders.

23. In any event, it is submitted, the petitioner was much beyond time in

submitting the performance guarantee.

24. Sufficient opportunity of reply and show cause was given to the

petitioner and, thereafter, the contesting respondents were compelled

to take the impugned action.

25. It is argued that there was no illegality, arbitrariness,

unreasonableness or mala fides in the impugned annulment and

debarment.

26. The respondent nos. 3 and 4, who are the contesting respondents,

submit that all relevant documents have been annexed to the writ

petition. As such, no affidavits are directed, and the matter is taken

up for adjudication on the issue of territorial jurisdiction as well as on

merits. For adjudication of the objection of territorial jurisdiction, the

nature of allegations made in the writ petition and certain aspects of

the factual disputes involved are required to be looked into. Hence, in

terms of the principle laid down in Order XIV Rule 2 of the Code of

Civil Procedure, all issues are taken up together for adjudication.

27. Since the question of territorial jurisdiction goes to the root of the

decision, the said issue is taken up for decision first.

28. In Alchemist (supra), the Supreme Court observed that, for the

purpose of deciding whether facts averred by the petitioner would or

would not constitute a part of cause of action, one has to consider

whether such fact constitutes a material, essential, or integral part of

the cause of action.

29. In Adani Exports (supra), the Supreme Court observed that each and

every fact pleaded does not give rise to a cause of action within the

court‟s territorial jurisdiction unless those facts are such which have a

nexus or relevance with the lis that is involved in the case. The Court,

in this context, relied on ONGC (supra), where the Supreme Court, in

the context of Article 226 of the Constitution, observed that the

expression „cause of action‟ means that bundle of facts which the

petitioner must prove, if traversed, to entitle him to a judgment in his

favour by the court. The Court further held that, in determining the

objection of lack of territorial jurisdiction, the court must take all the

facts pleaded in support of the cause of action into consideration

albeit without embarking upon an enquiry as to the correctness or

otherwise of the said facts. Thus, the question of territorial jurisdiction

must be decided on the facts pleaded in the petition.

30. Again, the Supreme Court, in South East Asia (supra), observed that

cause of action is a bundle of facts which, taken with the law

applicable to them, gives the plaintiff a right to claim relief against the

defendant. It must include some act done by the defendant, since, in

the absence of such an act, no cause of action would possibly accrue

or would arise.

31. Aligarh Muslim University, however, is a three-paragraph decision of

the Supreme Court, where no ratio can be said to have been laid

down. The same was apparently rendered in the context of a

proceeding under Section 31 of the Arbitration Act, 1940. The Court

held, in the facts of the case, that the arbitrator was from Aligarh and

was to adjudicate there; merely because the respondent was a

Calcutta-based firm, the High Court of Calcutta seemed to have

exercised jurisdiction where it had none by adopting a queer line of

reasoning.

32. However, the only common ingredients between the said case and the

present are that territorial jurisdiction was decided and the petitioners

are based in Calcutta (now Kolkata). It is rather obvious that where

the seat of arbitration is Aligarh, the Calcutta High Court does not

have jurisdiction under normal circumstances. No such issue is

involved in the case at hand. Hence, the said judgment is not a

germane precedent for the present consideration.

33. In National Textile Corporation (supra), the writ petitioner had claimed

delivery of certain goods upon adjustment of payment and for

injunction regarding the goods, which were to be supplied to mills at

Bombay (now Mumbai). The Supreme Court held that the mere fact

that the writ petitioner carries on business at Calcutta or that the

reply to the correspondence made by it was received at Calcutta is not

an integral part of the cause of action and therefore, the Calcutta High

Court had no jurisdiction to entertain the writ petition.

34. Thus, respondent nos. 3 and 4 in the present case seek to draw an

analogy with National Textile (supra) as, in the said case as well, it was

held that the mere fact that the writ petitioner carries on business at

Calcutta or that reply to correspondence made by it was received in

Calcutta is not an integral part of the cause of action.

35. In the same tune, respondent nos. 3 and 4 herein also cite Utkarsh

India Limited (supra), where a Division Bench of this court, in

connection with an online tendering process, held that this court had

no jurisdiction, although the petitioners in the said case deposited

earnest money from Kolkata and received all communication relating

to the impugned tender, including the disqualification letter, which

constituted cause of action, in Kolkata. There also, the Division Bench

recorded the petitioners‟ case that the impugned letter had cause

injury to their business and right to livelihood and thereby infringed

their right to trade and business guaranteed under Article 19 (1) (g) of

the Constitution. However, the Division Bench held that the entire

process of the impugned tender had emanated from the Head Office of

the Central Coalfields at Ranchi, Jharkhand, including the impugned

notice of disqualification and penalty, which formed the integral part

of cause of action for the lis.

36. However, on facts relevant to the ratio under discussion, there are

certain distinguishing features between the above cases and the

present lis. In paragraph no. 24 of Utkarsh India (supra), the Division

Bench held that Clause 32 of the General Conditions of Contract as

contained in the NIT clearly provided that in case of dispute arising

out of the contract entered into with suppliers, those will be subject to

the jurisdiction of the competent court of law. The courts in whose

territorial jurisdiction from where contract is being issued is located, it

was held, that is, Ranchi, Jharkhand, shall be competent to deal with

any matter arising out of the purchase order/contract. No similar

clause in the tender document has, however, been relied on in the

present case. Here, the entire gamut of facts pertaining to the

cancellation of LoA and debarment have to be looked into in the light

of Article 226 (2) of the Constitution.

37. Secondly, the cause of action in Utkarsh India (supra) was

disqualification of the petitioner in a tender simpliciter. In National

Textile Corporation (supra), there was a contractual dispute, which led

to withholding of goods.

38. In the present case, however, the bundle of facts comprising the cause

of action is not confined to the decisions taken in Madhya Pradesh by

the Respondent nos. 3 and 4 simpliciter. The petitioner has

specifically alleged that it had an arrangement with a financial service

provider (respondent no. 7), who duped the petitioner-company with

regard to the bank guarantees-in-issue. The petitioners also allege

that the said service provider not only procured the bank guarantees,

but also sent them to the respondent-authorities of its own, without

sanction from the petitioners, at least on the second or third occasion

after discovery of fraud.

39. Unlike Utkarsh's Case, here the dispute is not merely a bid being

turned down or disqualified on technical ground. The petitioner, in the

present case, was admittedly the successful bidder after the entire

tender process was over. It matter was at the stage of the petitioner

being awarded a contract, which was not done on the allegation that

the petitioner having failed to comply with the tender term of deposit

of bank guarantee within 14 days.

40. Again, in National Textile (supra), the dispute was contractual; the

goods, as per the contract, were to be supplied in Mumbai which,

having not been done, the case arose. Hence, the territorial

jurisdiction was held to lie in Mumbai.

41. In the case at hand, however, the dispute involves an alleged fraud

being perpetrated upon the petitioner as well in respect of the

particular bank guarantees which were the genesis of the refusal.

42. Hence, at least a part of the cause of action definitely arose within the

jurisdiction of this court.

43. Nawal Kishore Sharma (supra), cited by the petitioner, is apt in the

context. The Supreme Court, while considering the ambit of Article

226 (2) of the Constitution of India, was contemplating a situation

where the petitioner had been making all correspondence from his

native place in Bihar with regard to his disability compensation, the

rejection of which was the subject-matter of challenge.

44. Learned counsel for the Respondent nos. 3 and 4 seeks to distinguish

the ratio of Nawal Kishore's Case on the ground that there, the

Supreme Court had sympathised and taken into consideration the fact

that the petitioner was suffering from serious heart muscle disease

and breathing problem which forced him to stay in his native place.

However, such contention cannot be accepted, since the mention of

the disease by the Supreme Court was only in the context of

ascertaining territorial jurisdiction. In fact, immediately after such

finding in paragraph no. 17 of the judgment, the Supreme Court

proceeds to hold that "Prima facie, therefore, considering all the facts

together, a part or fraction of cause of action arose within the

jurisdiction of the Patna High Court where he received a letter of

refusal disentitling him from disability compensation."

45. Notably, the Supreme Court had considered, in Nawal Kishore Sharma

(supra), some of the decisions relied on by the respondent nos. 3 and

4, including ONGC's Case and Kusum Ingots as well as Election

Commission v. Saka Venkata Rao, which were considered by the

Supreme Court in Alchemist (supra).

46. The Division Bench of this Court, in State of Orissa V. Goenka

Investment and Mining Industries Pvt. Ltd., reported at AIR 1983 Cal

438, was considering as to whether a particular court had

jurisdiction. There, the primary consideration was where the notice of

termination was served, as there were two notices in contention. The

court observed that one of the notices was not a termination notice,

since not permitted as per the agreement and served on a non-

authorised person. The other notice, being free from such drawbacks,

was held to be a valid notice and thus accepted as the termination

notice which comprised of the cause of action. Having been served

within the territorial jurisdiction of the concerned court, it was held to

have jurisdiction. However, there the question was not whether the

place of issuance of notice or the place of receipt of the same has

jurisdiction.

47. Another factor to be considered here is that the present challenge is

not confined to the cancellation of work order to be issued to the

petitioner, but also extends to the debarment of three years, which

has both penal and civil consequences. Such consequences definitely

extend to the petitioner‟s business activities in West Bengal, which is

its base and where it is situated.

48. The factum of the petitioner running a business within the territory of

a court may be considered, under certain circumstances, irrelevant

and immaterial with regard to a dispute in respect of rejection of a bid;

but the said factor assumes major proportions when the challenge is

also to a debarment, which directly affects the business of the

petitioner everywhere, including in its seat of business, where it has

its head office. The impugned debarment, although on paper confined

only to tenders of the present respondent nos. 3 and 4, has larger and

adverse effect on the goodwill of the petitioner-company. Apart from

being a stigma against the petitioner in the sphere of its commercial

activities, a debarment in respect of one tendering authority generally

operates as a bar for others as well, since, almost in all tenders, there

is a restrictive clause regarding participation by bidders who are

suffering or have recently suffered debarment from any other

authority.

49. Thus, at least a part of the cause of action arises in West Bengal,

conferring territorial jurisdiction on this court, in the context of Article

226 (2) of the Constitution of India, to entertain and decide the writ

petition on merits.

50. In view of the above discussions, the objection regarding territorial

jurisdiction, raised by the respondent nos. 3 and 4, is turned down.

51. The main writ petition is now taken up for adjudication.

52. The petitioner has alleged that it is a century-old company with

impeccable goodwill and was in no way responsible for or connected

with the forgery committed in respect of the bank guarantees. It

alleges that the respondent no. 7 company, which was a financial

service provider appointed by the petitioner for procuring and

furnishing the bank guarantees, committed the forgery, may be in

collusion with the banks or others. In fact, it is the petitioner which

brought the forgery to the notice of the law enforcement authorities by

lodging complaints before the police. Even the second and third

fraudulent bank guarantees, it is contended, were sent by the

respondent no. 7 of its own, without intimating the petitioner.

53. Let us examine the turn of events.

54. The LOA was issued to the petitioner on March 31, 2023 and the e-

mail copy has well as signed copy of the bank guarantee worth Rs. 26

Crore 91 Lakh was sent from the petitioner‟s end on April 25, 2023.

The same, however, was notified to be fake by the concerned bank on

April 29, 2023.

55. The second bank guarantee was sent on May 3, 2023, which was also

fake. Now the respondent no. 3, vide letter dated May 10, 2023,

sought an explanation, as a prequel to the show cause.

56. However, a third fake bank guarantee was sent on May 16, 2023,

when the respondent no. 4 had also written to the petitioner.

57. At last, on May 17, 2023, a proper bank guarantee was issued by the

petitioner.

58. The petitioner, with more than a century‟s experience behind it, was

expected to be more cautious. It is rather incredible that as many as

three fake bank guarantees were sent by it, or on its behalf, on as

many as three successive occasions, be it through a „financial service

provider‟ or otherwise. The moment the first fraud was detected, the

petitioner ought to have taken corrective steps. Yet, two more similar

fake bank guarantees were sent on its behalf, from two different

banks.

59. The first fake bank guarantee was sent not by the service provider but

by the petitioner itself, as evident from the petitioner‟s email dated

April 25, 2023, annexed at page 192 of the writ petition. The

concerned bank, that is, the ICICI Bank, vide email dated April 29,

2023, informed the petitioner about the fraud.

60. Yet, the petitioner stuck to its blind faith on the perpetrator of the first

fraud, that is, the respondent no. 7. In the complaint lodged by the

petitioner, on the basis of which a First Information Report has been

registered (even as per the annexures to the writ petition), the

petitioner "believed" the respondent no. 7 after the discovery of the

first fraud and used the second fake bank guarantee provided by

respondent no. 7 dated May 3, 2023 and "waited for signing the

contract" with the M.P. Madhya Kshetra Vidyut Vitaran Co. Ltd., as

stated in paragraph no. 10 of the complaint, annexed to the writ

petition.

61. The petitioner alleges that thereafter, on May 16, 2023, the

respondent no. 7 issued a third fake bank guarantee, this time in the

name of the Federal Bank, without prior intimation to the petitioner.

62. However, there is nothing on record to show that the petitioner had

put any mechanism or instruction in place for the respondent no. 7 to

give prior intimation to the petitioner before sending another bank

guarantee. Rather, even till then, the petitioner was apparently sitting

tight over the repeated forgeries committed in its name, allegedly by

the respondent no. 7. The complaint against the alleged perpetrator

came long after, when the petitioner lodged complaint with the police

on May 23, 2023, which gave rise to a First Information Report.

63. Thus, the petitioner was guilty of utter negligence and was complacent

even after coming to know of the first instance of fraud, if not being in

connivance with the respondent no. 7 or other perpetrators of the

forgery.

64. Thus, there was sufficient reason for the respondent nos. 3 and 4 to

cancel the LOA issued to the petitioner.

65. Moreover, the outer limit of 14 days, as per the NIT, had long expired

on April 14, 2023. The first genuine bank guarantee was furnished by

the petitioner only on May 17, 2023, that is, more than one month

thereafter. There was no reason for the respondent authorities to

condone such delay, particularly in the context of the petitioner‟s

conduct of furnishing three fake bank guarantees in quick succession.

66. The Instructions to Bidders, which was admittedly a part of the tender

document, stipulated that the successful Bidder "shall" furnish the

initial Performance Security within 14 days of the receipt of

notification of award. The expression "shall" lends a mandatory tone

to the said clause.

67. The petitioner argues that the annulment of the award, on non-

compliance of the condition, was not automatic, since the language of

the relevant clause was that failure of the successful Bidder to submit

the initial Performance Security shall constitute "sufficient ground" for

the annulment and forfeiture of the Bid Security. However, the very

next sentence permits the Utility to award, in such case, the AMISP

Contract to the next lowest Bidder.

68. The conjunction of "shall" in furnishing the performance security in

time and the provision, on failure, to annul the LOA, forfeit security

and award the contract to the next lowest Bidder, does not leave any

doubt that the tenderers were at full liberty to do so, immediately

upon the delay having been committed. In fact, the respondent nos. 3

and 4 were rather charitable in issuing so many warnings and seeking

explanation from the petitioner in the present case.

69. The petitioner has next argued that the respondent nos. 3 and 4, by

their conduct of accepting the valid (fourth) bank guarantee as

Performance Guarantee, had condoned the delay. However, the said

argument is misconceived.

70. There was no instance, at any point of time, of the respondent nos. 3

and 4 acquiescing, „accepting‟ the bank guarantee or condoning the

considerable delay in submitting the same. Rather, by its several

communications, as referred to above, the respondent nos. 3 and 4

had been consistently intimating the petitioner that it was already out

of time in furnishing performance security after expiry of 14 days.

Explanations were also sought repeatedly, for the submission of fake

bank guarantees.

71. By its letters dated May 10 and May 16, 2023, the respondent no. 3

had repeatedly taken the stand that the petitioner‟s failure to submit

the bank guarantee on the due date had created an event of default;

consequently, the LoA issued on March 31, 2023 was liable to be

cancelled. Hence, at no point was there any „acceptance‟ or

„condonation‟ by the respondents.

72. In any event, furnishing three admittedly fake bank guarantees, even

though the first of which was furnished within the stipulated time, is

the very antithesis of bona fides on the part of the petitioner.

73. In R.K.Saxena V. Delhi Development Authority [ (2001) 4 SCC 137 ],

relied on by the petitioner, there was acceptance of several delayed

payments, which was deemed to be extension of time. Here, there is

no acceptance of any payment or interest thereon, since all the prior

bank guarantees submitted by the petitioner were fake. The only valid

one was furnished more than one month after the expiry of the last

date.

74. It does not lie in the mouth of the petitioner to place reliance of Poddar

Steel Corporation V. Ganesh Engineering Woks and Others, reported at

(1991) 3 SCC 273, which speaks about "minor technicality" being

waived. If furnishing three successive fake bank guarantees is termed

as a "minor technicality", this court is at a loss to assess what is a

major default.

75. In Miss Santosh Mehta V. Om Prakash and Others [ (1980) 3 SCC 610],

the context was judicial discretion to strike out the defence of a tenant

where the statutory provision was read in lenient perspective by the

Supreme Court. However, the protection given to a tenant by a

statute, that too in an era of beneficial legislation for the tenants,

which was read by the Supreme Court in advancing the intention of

the legislature, cannot be extended to the petitioner-company in the

present case, that too, in a fully commercial transaction.

76. Hence, none of the said reports have any relevance in the present

context.

77. Thus, the respondent nos. 3 and 4 were justified in cancelling the LoA,

in view of the delay of more than one month beyond the outer

stipulated limit occasioned by the petitioner in furnishing the

performance security bank guarantee.

78. Insofar as the debarment is concerned, there is also nothing illegal or

irregular there. The petitioner was given ample opportunity of showing

cause and explaining its conduct. In fact, the first three bank

guarantees being fake is an admitted position.

79. The reason behind such issuance of forged bank guarantees and the

role of the petitioner therein is, undoubtedly, a subject-matter of

criminal investigation. However, it cannot be denied that, from the

perspective of the tenderer, there were sufficient reasons to apprehend

foul play if work was awarded to the petitioner in the near future.

80. Moreover, vis-à-vis the tendering authority, the petitioner ought to

have been much more careful and cautious. It was negligent in

shifting the entire responsibility on the respondent no. 7, without

itself verifying the genuineness of the bank guarantee, which was an

essential component of getting the contract, on several occasions.

Such careless conduct on the part of the petitioner furnished

sufficient justifiable grounds to debar the petitioner for three years

from participating in the tenders of the respondent nos. 3 and 4.

81. Learned counsel for the respondent nos. 3 and 4 has rightly argued

that, there being no flaw in the decision-making process, the writ

court ought not to impose its own decision on the tendering

authorities.

82. Moreover, there was no instance of arbitrariness, mala fides or

unreasonableness in the impugned acts of the respondent-authorities.

Even applying the Wednesbury principle, there is no flaw in the

cancellation of the petitioner‟s LoA or debarment of the petitioner

worth interference by this court under the writ jurisdiction.

83. Before parting, the respondent nos. 3 and 4 have cited Dalip Singh V.

State of U.P. and Others, reported at (2010) 2 SCC 114 for the

proposition that a new creed of dishonest litigants, who are polluting

the stream of justice, ought to be strongly deprecated. However,

although the respondent nos.3 and 4 were undoubtedly negligent in

their over-reliance on respondent no. 7, which justifies the

cancellation and debarment impugned herein, it is too early yet, before

the conclusion of the criminal trial, to hold beyond doubt the

petitioner‟s direct involvement, perpetration of the offence and/or

collusion with the perpetrators thereof. Thus, labelling the petitioner a

"dishonest litigant" would probably be too harsh and premature at

this stage. In so far as the present writ petition is concerned, the

petitioner has not suppressed a single essential or relevant component

of the chain of events leading to the cause of action and, as such,

cannot be called an „unscrupulous‟ or a „dishonest litigant‟ at least for

the purpose of the present writ petition.

84. Learned counsel for the contesting respondents has also relied on N.G.

Projects Ltd. V. Vinod Kumar Jain and Others, reported at (2022) 6 SCC

127. There, the Supreme Court deprecated court interference in

tenders in respect of infrastructure projects or projects involving

public interest. The said proposition is applicable in the present case

too, as the project in question involves public interest. However, in

any event, the writ petitioner does not succeed in the present case on

other considerations, as spelt out above.

85. Hence, the writ petition fails. Accordingly, WPA 17132 of 2023 is

dismissed on contest without, however, any order as to costs.

86. Urgent certified server copies, if applied for, be issued to the parties

upon compliance of due formalities.

( Sabyasachi Bhattacharyya, J. )